CEO, LOUIS TAYLOR of UK Export Finance spoke to DoF readers about offering funding support for business expansion and in looking towards overseas channels to diversify and grow
The benefits of exporting are easy to see – a company can increase sales and revenue, enhance competitiveness, overcome domestic market saturation by finding new overseas channels for its service or product, and diversify. It creates more jobs, allows businesses to pay higher wages and cements the UK’s position as a leader in the world market. That is why it is UKEF’s (UK Export Finance) mission to ensure that no viable UK export fails for lack of finance or insurance. UKEF can support companies of all sizes and across sectors and help them to win contracts, fulfil orders and get paid.
It isn’t always enough to have a great product or service. Within a local market, opportunity can be limited due to competition from peer companies or market saturation – exporting offers businesses the chance to break through that barrier and capitalise on global market need. There is great global demand for UK exports thanks to its impressive track record as a strong trading nation. There is also potential for much more – and this is where UKEF can help. We work with more than 100 commercial lenders and brokers to offer government-backed loans, guarantees and insurance to support companies’ overseas sales. In the last five years alone, UKEF has provided £17 billion worth of support for UK exports.
Academic research shows that companies selling overseas with access to trade finance have export volumes that are as much as 60% higher. That is why UKEF will always look to support a viable opportunity for export, no matter the size of the company. SMEs can now quickly and easily access trade finance worth up to £2 million under UKEF’s trade finance schemes directly from their bank. UKEF’s network of Export Finance Managers, based all over the UK, can also help signpost businesses to alternative sources of support from the private sector.
Additionally, UKEF’s support can be in more ways than simply financial – UKEF can connect a company with potential buyers through its programme of procurement-led supplier fairs which have cross-sector appeal amongst SMEs as they look to actively match demand overseas with UK supply.
Here’s how UKEF support works in practice:
Case study 1: MR Solutions
In 2017, MR Solutions won a £1.2 million contract to export one of its MRI scanners to Sydney University. However, the deal was potentially jeopardised because the company couldn’t access sufficient working capital.
Cash flow management is a frequent challenge for SMEs, and one that is particularly pertinent for MR Solutions. The long manufacturing times required to build its products can put a strain on the company’s finances as it needs sufficient cash to pay its staff and suppliers for months at a time before a contract can be completed. Complicating matters further, MR Solutions’ business and cash flow is dependent on small numbers of high-value transactions.
One of the ways UKEF helps companies is by ensuring they can access the finance they need to fulfil an export contract. Under our Export Working Capital Scheme, we provided an 80% guarantee to MR Solutions’ bank for the issue of a working capital loan of much greater value than would have been possible without UKEF support.
This gave the company enough liquidity to fulfil the contract, which it may have otherwise had to turn down.
Case study 2: Bioguard Hygiene
When Northampton cleaning products manufacturer, Bioguard Hygiene, won an export order worth £90,000 with a large pharmacy chain in the Middle East, it found it had a challenge on its hands.
While great for Bioguard’s growth ambitions, having to finance production on a larger scale without the security of advance payments led the company to seek extra financial protection should anything go wrong.
As part of the solution, UKEF was able to provide bespoke export insurance support against the risk of non-payment by an overseas buyer. Since most of Bioguard’s business is domestic, the company only wanted a standalone policy covering its new Middle East business – but struggled to find single-market cover from the private insurance market.
Thanks to UKEF support, Bioguard was able to secure significant revenue from an important new customer and maintain its momentum in a high-value market. In just four years, Bioguard has quadrupled the proportion of its export business and hopes to continue its overseas success with a target of at least 40% of its orders coming from overseas within the next two years.
Case study 3: Essex Girl Beauty
Michelle Lauren, from Essex, founded her company Essex Girl Beauty in 2013. Starting off as a hobby, the company sells the latest beauty products from around the world including spray tanning kits, nail art products and hair care tools.
As most of Michelle’s suppliers are from outside the UK, the company was faced with cash flow restrictions as she had to make a quick return on existing stock before ordering new stock in.
Michelle’s local Export Finance Manager worked with her to discover what financial products were available from her bank, arranging introductions with the relevant people so that they were in a position to provide support quickly.
As a result, Michelle’s financial results went from £83k turnover last year to £110k this year, and her forecast for next year is £150k.
For more details, please visit www.great.gov.uk/get-finance